EEX agrees to buy Nasdaq’s European power business and replace EPADs
The dominant energy exchange in Europe, the European Energy Exchange (EEX), has agreed to buy Nasdaq's European energy trading business (power trading and clearing). The transaction is subject to regulatory approvals, primarily regarding the competition issue. If approved, the deal will, according to EEX, entail changes to the current Nordic electricity market model, including the withdrawal of EPADs from the product portfolio. Svenska kraftnät plans to conduct previously announced EPAD auctions during quarters 2 and 3 as usual.
On the morning of June 20, market participants were informed that EEX and Nasdaq have agreed that EEX will acquire Nasdaq's European power trading and clearing operations. The transaction will, among other things, involve the transfer of existing open positions in Nasdaq's Nordic, French and German power futures as well as European emission allowance futures to EEX's European Commodity Clearing House (ECC). The transaction is subject to regulatory approvals, primarily regarding the competition issue.
Since February 2023, Svenska kraftnät regularly conducts auctioning of so-called EPAD contracts corresponding to approximately 10 percent of the Swedish grid's capacity to transmit electricity between areas SE2 and SE3 and SE4, respectively. The auctions are part of Svenska kraftnät's pilot project, with the aim of supporting liquidity in the financial electricity market and facilitate the opportunities for market participants to hedge their production or consumption. The next auction is planned for June 27, followed by a summer break before auctions resume in mid-August (see the full schedule for Q3 here).
Svenska kraftnät intends to carry out these previously communicated auctions according to plan. How we proceed after that is subject to further analysis, where e.g. market participants' continued interest in the auctions constitutes an important input. However, the pilot, which runs in 2023 with a possible extension until 2024, can only auction EPAD contracts as long as they are traded on the financial electricity market.
Using another standardized product that supports hedging of area differences would be possible. Svenska kraftnät’s understanding is that the process for the auctions and the trading rules should be able to convert into the zonal futures EEX plans to introduce instead of EPADs.